Finding Foundations

Published on 8/6/2023

Hi there! Welcome to my humble little blog following along with my experience of buying land and building a house in semi-rural Kyoto, Japan! My wife and I are still very early in the process, but I thought it'd be a good way to document the process and maybe illuminate how it could turn out if you decide to go on a similar journey.

This is partly a project for fun, because I want to write more things, but also hopefully it's a useful resource for anyone looking to build a house in this lovely country as well!

The Pieces in Broad Strokes

There's a few major components to becoming a real estate owner in Japan, namely:

Location, of course
The property itself, either as a unit of a larger building or a plot of land for a standalone building
The Money, capitalized for dramatic effect because of the large amounts in question

Together they form an interesting web of constraints and balances, as one's budget dictates the areas one can afford to buy in; but it's also possible to seek property in more affordable areas to spend a larger amount on the building/unit. It does, as so many things do, largely depend on financials, so you will likely be asked by any agents you talk to about your job and salary and residence status before getting too deep into discussing any particular properties.

About the Where

When it comes to location, well, this is largely up to the decision makers of your household. In our case, neither of us want to live in Tokyo and we have reasons to live in Kyoto, so it was a pretty easy choice for us. There is a strong correlation between location and how much the property will cost, though, so that's something to keep in mind.

In general, land in Tokyo is going to be dramatically more expensive than anywhere else, on average three times as much as the next most expensive prefecture Osaka! For tower mansions, Tokyo is still significantly more expensive, but the gap to second place is a little less dramatic.

Prefecture	Tower Mansion (70m^2 price)	Land (price/m^2)	Land (price/70m^2)
Tokyo	83.7million yen	1million yen	70million yen
Osaka	56.3million yen	.35million yen	24.5million yen
Fukuoka	39.4million yen	.14million yen	9.8million yen
Kanagawa	55.5million yen	.28million yen	19.6million yen

Useful Google terms:

タワーマンション tawa- mannsyon: tower mansion, typically an apartment unit
購入値段 kounyuunedann: purchase price
地方 tihou: region

About the How

That is quite a bit of money to be talking about, so it helps to estimate things like down payments, fees, total loan amount, etc. There are a lot of factors, with some being more critical than others:

PR or permanent residency (永住権) will be one of the first questions an agent asks, and having it opens you up to a much wider selection of banks willing to loan to you, and improves your odds of 100+% loans (or フールローン)
Your health (健康状態), with special emphasis on the "three major conditions" (三大疾病), being cancer, stroke, and acute myocardial infarction
Salary (年収), time at your current company (勤続年数), type of employment (勤務形態), with higher salary and more time at your current company being more preferable, as well as permanent employment (正社員) being prefered over alternatives
The age you'll be on completion of the loan (完済時年齢), with most banks not wanting to extend loans that last past a lendee turning 80
In certain cases, such as a joint loan, or combining incomes with your partner for the loan, you may need a co-signer (連帯保証人)
In some cases, having a Japanese spouse may be useful
Many other things are considered as well, such as existing debts, history of late payments, bankruptcies, time at current residence...

There are some calculators for estimating the amount you can get, but for a permanent employee with no negative marks and no major health complications, a typical quick estimate is 8 times your salary for a tower mansion and ~5.5 times your salary for land and a building.

My Scenario

I don't want to share too much about my situation, but some of it can still be useful for extrapolation. Some of the basic things:

I have PR
My wife is Japanese
Health wise, I have no notable positive or negative marks
I haven't been at my current job for more than a year yet, but I am a permanent employee and I have a fairly high salary, above 10 million yen
Thankfully I'm still in my early 30s, so I won't be 80 for a while after a 35 year loan!

Based on this, for the 0% down payment 35-year loan we're currently applying for, the bank we're talking to is predicting a 0.625% floating interest rate. Using a loan calculator from SMBC, we can get a few approximations for monthly payments, initial fees, and total amount repaid:

Loan amount (million yen)	Monthly payment	Initial fees	Total amount repaid (million yen)	Ideal monthly income floor
2500	66,280 yen	750,000 yen	2784	221,000 yen
3000	79,544 yen	880,000 yen	3340.8	265,147 yen
4000	106,058 yen	1,140,000 yen	4454.4	353,527 yen
5000	132,573 yen	1,400,000 yen	5568.1	441,910 yen
8000	212,117 yen	2,180,000 yen	8908.9	707,057 yen
10,000	265,147 yen	2,700,000 yen	11,113.6	883,824 yen

A common piece of budgeting advice is to keep your housing costs below 30% of your gross income, so the last column is calculated by (monthly payment / 0.3).

I hope this was useful! Let me know